Q3 Report 2007 Johan Molin, President & CEO 1
Financial Highlights Q3 Q3 - Solid improvement Good continued growth in all areas Raw material compensated & efficiency gains Earnings improvements in all divisions Sales 8,274 MSEK +7% +7% organic, +4% acquired growth, -3% currency EBIT 1,404 MSEK +14% Cash flow 1,306 MSEK +42% EPS 2.36 SEK +17% 2
Financial Highlights Jan-Sep Sales 24,830 MSEK +8% +7% organic, +5% acquired growth, -4% currency EBIT 4,018 MSEK +15% Cash Flow 3,068 MSEK +31% EPS 6.72 SEK +15% 3
Group Sales in Local Currencies Jan-Sep 2007 38 +12 47 +9 6 +30 2 +23 1 +24 6 +20 Portion of Group sales Jan-Sep 2007 % Year-to-date vs previous year % 4
Organic Growth % 14 12 2007: 8% (8%) 10 8 6 4 2 0-2 2003 2004 2005 2006 2007-4 Quarter Rolling 12-months Target 5
Growth Highlights Good general growth New markets & regions 11% of total sales in Q4 Baodean & irevo Secure issuance growing Fargo very strong growth Asian sales companies Successful launch of European and American lock series 6
Sales Growth - Currency Adjusted - Stable double digit development % 16 14 12 Run rate 13% Organic 8% Acquired 5% MSEK 34000 32000 10 30000 8 6 28000 4 26000 2 0-2 2004 2005 2006 2007 Acquired growth Organic growth Sales rolling 12-months in fixed currencies 24000 22000 7
Acquisitions Q3 irevo and Baodean Fully approved and consolidated from 1 October irevo: World largest supplier of electronic locks for the residential market Sales of 400 MSEK in Korea and China Dilutive in Q4 Baodean: China s leading high security lock maker 8
Operating Income* (EBIT) MSEK 1450 1400 1350 1300 1250 1200 1150 1100 1050 1000 950 900 850 Run rate 5,292 MSEK (4,559) +16% 5200 4700 4200 3700 800 2004 2005 2006 2007 Quarter Quarter Rolling 12-months 3200 12-months *Rolling 12-months excludes 2006 restructuring costs of 1 474 MSEK 9
Operating Margin* (EBIT) 17,5 17,0 Run rate 16.1% (14.9) 16,5 16,0 EBIT % 15,5 15,0 14,5 14,0 13,5 13,0 2004 2005 2006 2007 Quarter Rolling 12-months *Excluding 2006 restructuring costs of 1 474 MSEK 10
Margin Highlights Q3 Volume growth 4% Price increases have come through +3% Raw material compensated No dilution from acquisitions Restructuring slightly ahead of plan Total reduction of 1035 employees Quarterly savings 60 MSEK (85 from project start less 25 LY) Run rate 57% of total savings Total annual savings 600 MSEK from 2009 11
Division - EMEA Good general growth in most markets Somewhat slower in the UK, Spain and Germany SALES share of Group total % 39 Good leverage from growth Restructuring progressing well Operating margin (EBIT) + Volume + Restructuring savings = Material cost increase compensated 18 17 16 15 14 13 EBIT % 2004 2005 2006 2007 12
Division - Americas Good general growth in all sectors except residential Residential affected by weakening demand SALES share of Group total % 31 Activity level is healthy Mexico stable growth EBIT % Operating margin (EBIT) + Volume = No dilution = Material cost increase compensated 21 20 19 18 17 16 15 2004 2005 2006 2007 13
Division - Asia Pacific Good growth in the Pacific Asian sales outside China picking up Strong development in China Baodean consolidated from 1 October irevo will dilute from 1 October with 1.0-1.5% Price increase in Q3 very effective Operating margin (EBIT) + Volume growth + Implemented price increases = Raw material compensated 20 18 16 14 12 10 8 6 4 EBIT % SALES share of Group total % 2004 2005 2006 2007 7 14
Division - Global Technologies Good general development Record profit New organisation HID/Fargo/ITG coming together Sales synergies and market convergence SALES share of Group total % 14 New factory in Malaysia running well Ronneby factory closed Operating margin (EBIT) + Volume + Manufacturing and overhead savings - Continued market investments 18 17 16 15 14 13 12 EBIT % 2004 2005 2006 2007 15
Division - Entrance Systems Service developing at a good pace New door sales somewhat slower in the US and EMEA SALES share of Group total % 9 Accelerated growth from low level in Asia, primarily in China Decision to close Dieburg, Germany Operating margin (EBIT) + Volume growth + Price increases 17 16 15 14 13 12 11 10 9 EBIT % 2004 2005 2006 2007 16
Q3 Report 2007 Tomas Eliasson, CFO 17
Financial Highlights Q3 and Jan-Sep 2007 3nd Quarter Jan-Sep MSEK 2007 2006 Change 2007 2006 Change Sales 8,274 7,736 +7% 24,830 23,078 +8% Whereof Organic growth +7% +7% Acquired growth +4% +5% FX-differences -248-3% -943-4% Operating income (EBIT) 1,404 1,235* +14% 4,018 3,496* +15% EBIT-margin (%) 17.0 16.0* 16.2 15.2* Operating cash flow 1,306 919 +42% 3,068 2,339 +31% EPS (SEK) 2.36 2.02* +17% 6.72 5.85* +15% *Excluding restructuring costs of 520 SEK M 18
Operating Cash Flow MSEK 1400 5000 1200 Quarter 1000 800 600 4500 4000 3500 12-mths 400 3000 200 2500 0 2004 2005 2006 2007 2000 Quarter Rolling 12-months 19
Working Capital Receivables 59 58 57 DSO: 56 (55) 56 55 Days 54 53 52 51 50 49 2004 2005 2006 2007 20
Working Capital Inventories 120 115 MTPT: 106 (111) 110 Days 105 100 95 2004 2005 2006 2007 21
Gearing % and Net Debt MSEK 16000 160 14000 140 12000 120 10000 100 8000 6000 4000 Debt/Equity 91 91 80 60 40 2000 20 0 Net debt 2004 2005 2006 2007 0 Gearing Net debt Gearing 22
Return On Capital Employed* % 22 Target 20% 20 18 16 14 12 ROCE YTD YTD 18.4% (16.5) 2004 2005 2006 2007 *2006 excludes restructuring 23
Q3 Report 2007 Johan Molin President & CEO 24
Conclusion Q3 Strong total growth, +11%, driven by good general demand, market investments and acquisitions Emerging markets takes off Price management and efficiency programs adds to profit Restructuring ahead of plan, 57% concluded Solid improvement of EBIT in all divisions 25
Outlook Going Forward Organic sales growth is expected to continue at a good rate The operating margin (EBIT) and operating cash flow are expected to develop well 26
Q&A 27